Chexsystems is a reporting agency for over 9,000 banks, which represents over 80% of the banks and credit unions in the United States. Commonly misspelled as Check Systems or Chex Systems, Chexsystems is where banks and credit unions report any problems they have with the way consumer handled their bank account. The banks do this so they have a central facility to share information on any consumers who abuse their checking or savings account privileges. This way the banks can protect each other from repeat offenders in the future.
Some common examples of the type of problem that gets reported to Chexsystems include:
• Account abuse – via debit card
• Overdrafts by multiple checks
• Using fake identification to open an account
• Fraud on the part of the account holder
• Depositing a fraudulent check
• Customers who owe the bank unpaid fees after their account is closed.
One you have been reported to Chexsystems for abusing your checking or savings account, you will find it hard to open an account at any bank that is a member of Chexsystems. This is because any bank that is a member of Chexsystems will run your name through the Chexsystems records to see if you have been reported for abusing your bank account by another bank before they will allow you to open an account with their bank.
So what do you do if you were reported to Chexsystems?
Either find a bank that does not use Chexsystems and therefore will allow you to open an account or go back to the bank that reported you and try to clear up any problems and ask them to have you name removed from Chexsystems’ records.
On this website, we list the banks and credit unions by state that still do not use Chexsystems. Although this list gets smaller and smaller as time passes, there are still banks and credit unions in most states that will let you open an account without clearing you through Chexsystems.
How long does my record stay on Chexsystems?
Unfortunately if you are reported to Chexsystems by a bank for “cause” (which basically means your account was closed because you abused your bank account), the incident will remain on your record for five years. This is a long time to go without opening a bank account.
Is Chexsystems like a credit bureau?
The difference between Chexsystems and a credit bureau is that a typical credit bureau will give your handling of credit a score – commonly known as a FICO score. This score will go up and down with time depending upon how you handle your credit. One bad incident will hurt your score, but it does not prevent you from getting credit.
On the other hand you could handle your bank account perfectly for twenty years and have one bad incident. If this incident is reported to Chexsystems, you will probably not be able to open a new bank account despite your perfect handling of your checking account privileges for many years.
This difference is why many people feel that the Chexsystems reporting practices are unfair to the consumer. But despite this fundamental flaw in reporting, consumers all across the country find that they are helpless when it comes to dealing with Chexsystems.